Nov. 7 (Bloomberg) -- China’s yuan dropped by the most in almost three weeks as the central bank set the reference rate weaker after the Group of 20 nations’ meeting and on signs inflation is easing.
Commerce Minister Chen Deming said the yuan’s exchange rate is within a reasonable range, the Economic Information Daily reported today, citing comments he made in Cannes, France, where the G-20 meeting was held. Consumer prices rose 5.4 percent in October from a year earlier, compared with 6.1 percent in September, according to the median forecast of economists surveyed by Bloomberg before a report on Nov. 9.
“It’s not China’s wish to have the yuan appreciate too fast and as the G-20 meeting has ended, the pressure has eased,” said Stella Lee, the Hong Kong-based president of Success Futures & Foreign Exchange Ltd. “There’s also less need for a stronger currency with slowing inflation.”
The yuan dropped 0.16 percent to 6.3491 per dollar as of 10:17 a.m. in Shanghai, according to the China Foreign Exchange Trade System. That’s the biggest one-day decline since Oct. 18. The currency reached 6.3370 on Nov. 4, the strongest level since the country unified the official and market exchange rates at the end of 1993.
The People’s Bank of China lowered the reference rate by 0.07 percent to 6.3212. The currency is allowed to trade 0.5 percent either side of the rate. In Hong Kong’s offshore market, the yuan slipped 0.06 percent to 6.3870 per dollar. Twelve-month non-deliverable forwards on the yuan fell 0.07 percent to 6.3545, a 0.1 percent discount to the onshore spot rate.
Inflation may be around 5.5 percent in October, China Securities Journal reported today, citing Fan Jianping, director of economic forecasting at the State Information Center.
Global leaders at the G-20 summit affirmed their commitment to “move more rapidly toward market-determined” currencies and welcomed China’s “determination” to allow the yuan to trade more freely in line with its economy, according to joint statements released after the meeting.
--Editors: Andrew Janes, James Regan
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